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Continual evolution of the CMOS technology requires thinner gate dielectric to maintain high performance. However, when moving into the sub-65 nm CMOS generation, the traditional poly-Si gate approach cannot effectively reduce the gate thickness further due to the poly-depletion effect. Fully silicided metal gate (FUSI) has been proven to be a promising solution. FUSI metal gate can significantly reduce gate-line sheet resistance, eliminate boron penetration to channels and has good process compatibility with high-k gate dielectric. In this paper, the effect of oxygen introduced by the process of conventional furnace annealing in FUSI metal gate is investigated. A 120 nm amorphous Si layer was sputtered on dielectric oxides of various thicknesses grown using a standard oxidation process. Raman spectra showed that the 120 nm thick pre-sputtered amorphous Si recrystallized after annealing in a conventional furnace at 900°C. Secondary ion mass spectrometry (SIMS) revealed that the annealed Si film contained traces of oxygen which were incorporated into the film during the furnace annealing process. It is suspected that the oxygen was originated from a few ppm of impurities present in the high-purity annealing gas (N2). When a 100 nm of Ni was deposited using a DC sputterer on such sample and was rapid thermal annealed (RTA) at 400°C to form a fully silicide film, the transmission electron micrograph showed the existence of unreacted oxygen-rich Si layer along the interface of the NiSi/SiO2, leading to areal non-uniformity in the workfunction. It is suggested that the presence of oxygen can effectively retard the Ni diffusion into the Si film during the silicidation process such that the FUSI process is delayed, and the equivalent oxide thickness (EOT) increased as shown by capacitance-voltage (C-V) measurements. The workfunction of Ni-silicided FUSI film determined by C-V measurement on MOS structures was found to increase compared to the as-deposited amorphous Si film, Singapore-MIT Alliance (SMA)